GST News and Updates – June 2020

Clarifications on Law and Procedure

Levy of GST on remuneration paid to directors of a company

Circular 140/2020 clarifies the applicability of GST on remuneration paid to directors of a company.

Remuneration paid to whole time directors and independent directors who are not employees of the company is taxable in the hands of the company under reverse charge mechanism.

Remuneration paid to directors who are employees of the company could take two forms.

  • One could under an employer-employee relationship with remuneration paid as salary for which Income Tax TDS is deducted under section 192 of the Income Tax Act, and recorded in the company’s books of accounts under the head “Salaries”. This transaction is not treated as a supply under GST (See Schedule III of CGST Act, 2017) and is not a taxable transaction.
  • The other could be remuneration for professional service rendered by the director for which Income Tax TDS is deducted under section 194 J of the Income Tax Act. This transaction is treated as supply and is taxable in the hands of the company under reverse charge mechanism (assuming that the director does not have a GST Registration).

Changes to return filing procedure

Relief offered to Taxpayers

Extends time period to issue order for rejection of refund

In view of the Covid-19 pandemic, CGST Notification 46/2020 extends the time available to officers to issue an order for rejection of refund of tax under Section 54 of the CGST Act, 2017.

E-Way bill validity

For E-Way bills generated on or before 24th March 2020, and expiring after on or after the 20th March 2020, CGST Notification 47/2020 extends the validity to 30th June 2020.

Zero late fee for Nil Returns and Limit on Late Fee for late filing of old GSTR-3B Returns

As an one time amnesty measure, for GSTR-3B returns for the periods July 2017 to January 2020, filed between July 1, 2020 and September 30, 2020, Notification 52/2020 sets the late fee as follows

  • For Nil Returns, there is no late fee
  • For non-Nil Returns, the late fee is capped at Rupees Five Hundred per return.

Relief in payment of interest

Earlier, relief in payment of interest was conditional on when the taxpayer filed GSTR-3B. Notification 51/2020 provides further relief and provides the following interest calculation (unrelated to when GSTR-3B is filed).

Taxpayers with Aggregate turnover > Rs. 5 Crore in the preceding FY

Tax Period Due Date No interest payable till Period for which interest is payable @9% Date from which interest is payable @18%
Feb 2020 20th March, 2020 4th April, 2020 5th April, 2020 – 24th June, 2020 25th June, 2020
Mar 2020 20th April, 2020 5th May, 2020 6th May, 2020 – 24th June, 2020 25th June, 2020
Apr 2020 20th May, 2020 4th June, 2020 5th June, 2020 – 24th June, 2020 25th June, 2020
May 2020 27th June, 2020 27th June, 2020 – 28th June, 2020

Taxpayers with Aggregate turnover up to Rs. 5 Crore in the preceding FY (Group A states)

Tax Period Due Date No interest payable till Period for which interest is payable @9% Date from which interest is payable @18%
Feb 2020 22th March, 2020 30th June, 2020 1st July, 2020, – 30th September, 2020 1st October, 2020
Mar 2020 22th April, 2020 3rd July, 2020 4st July, 2020, – 30th September, 2020 1st October, 2020
Apr 2020 22nd May, 2020 6th July, 2020 7th July, 2020, – 30th September, 2020 1st October, 2020
May 2020 12th July, 2020 12th September, 2020 13th September, 2020, – 30th September, 2020 1st October, 2020
June 2020 22nd July, 2020 23th September, 2020 24th September, 2020, – 30th September, 2020 1st October, 2020

Taxpayers with Aggregate turnover up to Rs. 5 Crore in the preceding FY (Group B states)

Tax Period Due Date No interest payable till Period for which interest is payable @9% Date from which interest is payable @18%
Feb 2020 24th March, 2020 30th June, 2020 1st July, 2020, – 30th September, 2020 1st October, 2020
Mar 2020 24th April, 2020 5th July, 2020 6th July, 2020, – 30th September, 2020 1st October, 2020
Apr 2020 24th May, 2020 9th July, 2020 10th July, 2020, – 30th September, 2020 1st October, 2020
May 2020 14th July, 2020 15th September, 2020 16th September, 2020, – 30th September, 2020 1st October, 2020
June 2020 24th July, 2020 25th September, 2020 26th September, 2020, – 30th September, 2020 1st October, 2020